ORANGETHEORY FITNESS Franchise Startup Cost, Revenue and Profit Margin
Is Orangetheory Fitness a Franchise? If you are interested in being a part of a fitness franchise that offers enormous opportunities for growth, then the Orangetheory franchise is for you.
Orangetheory first opened its doors for business in 2010.
In the same year, its franchising arm was also birthed. This franchise opportunity has since blossomed into a global brand. It presents international franchisees an opportunity to become a part of the Orangetheory success story.
Ultimate Fitness Holdings LLC is Orangetheory’s parent company. Its headquarters is located at Boca Raton, Florida, United States of America. Its number of outlets (both domestic and international) has since grown. The number of its units stands at over 1,000 and increases.
This is expected to increase significantly in the coming years as it receives more applications from prospective franchisees.
How to Open an Orangetheory Fitness Franchise
As briefly stated earlier, the Orangetheory franchise specializes in providing health and fitness services through its state-of-the-art studios. Ultimate Fitness Group LLC offers members the opportunity to own and run their Orangetheory fitness studios. Each of its studios is fully equipped with assorted exercise equipment. Some of these include cardio and strength machines.
These studios offer trainer-led workout sessions for clients. These workout sessions consist of both strength training and cardiovascular sessions. Some of the equipment you will find in an Orangetheory studio includes treadmills, suspension training, free weights, and rowing machines. Facilities include lockers, a changing area/shower, and a reception area among others.
For every workout session, participants/clients each wear a heart-rate monitor. These are projected onto screens. They are part of its state of the art health and fitness equipment which has made it a household name and a preferred health and fitness franchise for many prospective franchisees.
All Orangetheory studios are characterized by the franchisor’s signature energizing color scheme. This color is orange. There is also its trade dress as well. Prospective franchisees are offered the opportunity of owning an Orangetheory franchise only if they qualify. Prospective franchisees may either be made up of individuals or entities.
Details on these requirements will be provided shortly.
How Much Does Orangetheory Fitness Franchise Cost?
Orangetheory franchise offers prospective franchisees one of the best deals in the industry for becoming its franchisee. To own an Orangetheory franchise (studio), you need an initial investment sum starting from a low of $563,529 to $999,121, net-worth requirement of $500,000, and a liquid cash requirement of $150,000.
There are ongoing fees as well. All franchisees are expected to make payments of these ongoing fees according to the stipulated guideline as given by the franchisor. These ongoing fees consist of the initial franchise fee which starts from $42,500 to $49,500, an ad royalty fee of 2%, and an ongoing royalty fee of 8%.
Orangetheory Fitness Franchise Fee
There are several other investment fees you should know about. These include the following;
Type of Fee Low High
- Deposit for Leasehold $12,000 $30,000
- An Initial Inventory of Orangetheory
Fitness Retail Merchandise $4,000 $6,000
- Travel and Living Expenses During
Training (for all participants) $1,200 $4,800
- Fitness Equipment Maintenance Contract $900 $1,500
- Leasehold Deposit $12,000 $30,000
- Fitness Equipment (with installation)
And Orangetheory Beat Start-Up System $93,108 $111,913
- Three Month’s Rent $18,000 $45,000
- Reception Desk, Retail Display Wall and
Interior Logo Signage $11,500 $14,500
- Leasehold Improvements and Construction
Costs $200,000 $560,000
- Additional Funds for a 3 Month Period $25,000 $50,000
- First Aid and AED Equipment and Training $1,000 $5,000
- Insurance $3,500 $5,000
- Exterior Signage $5,000 $7,000
- Business Licenses and Miscellaneous
Opening Costs $1,000 $4,000
- Video and Audio Systems, Other Equipment
and Supplies $20,500 $25,500
- Pre-Sale Coordinator Program $0 $3,900
- Computer Systems $14,000 $18,000
- Pre-Sale and Grand Opening Equipment
and Supplies $30,000 $40,000
Estimated Total $405,905 $944,860
These are some of the fees you will have to pay as an Orangetheory franchisee if your application finally gets approved. However, other fees you will attract during your franchise ownership period also include Orangetheory’s Brand Fund Contributions. This is made up of 1% of the gross sales you make. This fee has a maximum of 3% of gross sales.
Other fees include the Toll Fees. This generally falls within the range of $149 to $449 per month. Its Non-Compliance fee is charged at $1,000 per each notice of violation. Orangetheory has an Operations Manual Replacement Charge of $250. For Products or Supplier Approval costs, it is made up of a reasonable cost of testing or inspection. This also includes an actual cost of professional and laboratory fees. The living and travel expenses of the franchisor’s personnel are included as well.
As an Orangetheory franchisee, other fees to be paid by you include the Indemnification fee which will vary depending on the circumstances. A Management fee of 5% of your gross sales including the franchisor’s reasonable costs and expenses are also included. Cost Attorney fees will differ depending on a variety of circumstances as well.
Audit Costs consist of a fee that is equivalent to the cost of the audit. However, this may include accruable charges of independent accountants and travel expenses as well. A Technology-Software License fee which falls within the range of $399 to $749 is charged per month. This also includes the online setup fee for MindBody charged at $575.
For additional training, franchisees get to pay a reasonable fee. It currently costs $1,000 per individual/session. There is no specific fee for product purchases. This fee varies. Refresher courses/training provided by the franchisor is charged at $250/day for each person trained. Insurance premiums are made up of the number of unpaid premiums, including an administrative fee.
Orangetheory franchise organizes annual conferences for all its partners/franchisees. This conference attracts a fee of $1,000 per individual. Onsite evaluation fees depend on the expenses and costs incurred by the franchisor in connection with the on-site evaluation. There is an annual training summit too. This is charged at $500 per attendee.
For brand contributions, it consists of 1% of your gross sales with a cap of 3% of gross sales. Interest and late fees have an amount lesser than 18% per annum or the highest rate allowed by law. This also comes with a $35 weekly or part of the week that the payment is overdue. Under its local advertising arrangement, it will be charged based on the minimum amount stipulated by the franchisor. This will fall within the range of $2,500 to $4,000 per month.
Does Orangetheory Offer Support? If they do, what do they consist of?
The Orangetheory franchise provides a variety of support. These consist of three main types; Ongoing, Training, and Marketing Support. Let’s discuss each of these, shall we?
- Ongoing Support
As the name suggests, ongoing support can continue for as long as you own an Orangetheory franchise. Support provided by this franchisor is targeted at increasing the chances of your success significantly. You get to enjoy the following packages as an Orangetheory franchisee;
- Grand Opening
The entire process of applying for an Orangetheory franchise can be quite stressful. This is because a lot of procedures are involved during the application process. After all your efforts have been channeled towards realizing your objective, Orangetheory helps you launch your business in a big way. This is meant to enhance the visibility of your Orangetheory studio. This increased visibility is a form of marketing for your business.
- Online Support
The success of doing business has a lot to do with how information (in the form of client requests) are processed and attended to. Technology plays a key role in how this is being done. For Orangetheory franchisees, the franchisor provides the necessary tools and software to enable the smooth running of operations. An example of its online support is the use of its Qvinci software.
This has enabled franchisees to have a better understanding and control over how their franchise units are faring. Also, it enables them to know when to make the next move like increasing its number of units.
- A Toll-Free Line
Businesses having a toll-free number tend to easily win the confidence of customers. Orangetheory franchise provides you with a toll-free number to easily connect with your callers. What makes this more useful is its add-on features. These allow pre-recorded messages by you to reach each caller/potential client. These calls are easily forwarded to your cell phone if you are not present.
You get to choose whether to pick the call or not based on your schedule (whether in a meeting or any other engagement).
- Access to Proprietary Software and Services
As an Orangetheory franchisee, you get access to use its top-of-the-line range of proprietary software and cloud services that make doing business much easier and smarter. Some of these include phone.com (one of the leading cloud communication and business phone services in the market), ScheduleAnywhere; used for online employee scheduling made by Atlas Business Solutions.
Orangetheory’s other effective software available to you includes Buxton which is used in client analytics. It also identifies the customers who will be of the most value for your business. Higher Visibility is yet another service used by this franchisor for internet marketing. This allows Search Engine Optimizations, Web Design, and Pay Per Click Marketing. There is also Workpop (a service that helps you in applicant hiring) as well as Social Vantage for social media marketing.
This is an important business activity that will be held periodically as specified by the franchisor. It is meant to provide knowledge as well as listen to challenges and proffering solutions to these challenges. Meetings are crucial to how effective and productive the franchise is. The details or agenda of each meeting will be set by the franchisor towards ensuring that all its activities are streamlined towards attaining set goals.
- Newsletter Support
This is another way the Orangetheory franchise provides ongoing support to its franchisees. As a franchisee, you need to be kept in the loop on happenings within the organization or business. Through its newsletters, Orangetheory provides every update on its present state of affairs as well as innovations it intends to introduce. This allows franchisees to prepare for such changes or accommodate new services/products.
Another objective to be achieved by this support is to make the brand more attractive and appealing to its target market. It is a strategy meant to keep up (or ahead of the competition) with competition within the industry.
Without training, you will be unable to effectively operate your Orangetheory franchise. A detailed training process is provided by the franchisor. This process consists of 3.3 hours of on-the-job training, 58.25 hours of classroom training as well as an additional training program offered electronically. All of these contribute significantly to helping you have a smooth run with your franchise.
- Marketing Support
This is a crucial aspect of its business. It improves the visibility of the business as well as its appeal to its target market. Marketing has contributed to a large part of its success over the years. As a franchisee, you are expected to perform no less than what is expected hence its support in the following areas;
- Franchise Support Network
This is a platform that offers you a branding plan as a franchisee. This builds on its previous successes by allowing you to successfully open a successful franchise unit and maintain your growth and attractiveness. Its advertising strategies enhance your staying power as its franchisee.
- Cooperative Advertising
Orangetheory provides cooperative advertising for all its franchisees. This is a strategy that significantly reduces advertising costs by sharing such costs within the network. By sharing the cost, you still get the maximum exposure provided by the advertisement. These advert channels may include print, electronic, online, or all of them.
- Social Media
We are at a point where social media has become an integral part of people’s lives. The huge opportunities presented by the use of social media have been exploited by businesses including Orangetheory to achieve its marketing objectives.
As its franchisee, Orangetheory provides all the support you need by taking advantage of its viral nature, increased traffic, and the ability to engage with target clients.
- National Media Advertising
The Orangetheory franchise has a national and international spread. Its status enables it to provide you with all the marketing support you need through a national marketing campaign. While this is a great strategy for growing your business, you should also put in effort in promoting your own business as well. This, combined with your efforts will guarantee success.
- Regional Advertising
While Orangetheory is a global brand, every franchisee including you has a regional base. What this means is that your local customers need to be attended to. You are provided the necessary support to direct your marketing campaign to fit your local market.
Promoting your Orangetheory Franchise
As an Orangetheory franchisee, you are expected to promote your business. This is apart from the support provided by the franchisor. Hence part of its contract terms involves having to spend between $2,500 and $4,000 per month on local advertising. This is aimed at capturing your local market. Also to retain your operating license, you need to fully follow all of its corporate guidelines.
To locally promote your franchise, you will need to have a website. There are lots of simple tools you can use in creating cheap and effective websites. The main objective here is customer growth. The higher the growth recorded, the more income you make as a franchisee.
Are there any Financing Options?
Yes, there are. Qualified franchisees benefit from funding made possible by third-party relationships entered into by the franchisor. These offer funding covering important aspects of the business like start-up costs, franchise fees, inventory, equipment, payroll, and accounts receivable. These reduce the costs of owning an Orangetheory franchise significantly.
How Much Does Orangetheory Franchise Make?
This question will be on the mind of anyone interested in owning an Orangetheory franchise. However, there is no direct answer or available information on that. But information on how much is charged for membership of its studios can be used as a yardstick to measure. Another way to measure profitability is by the number of Orangetheory studios/units you own. Luckily, the franchisor encourages franchisees to own multiple units.
To enable you to get a picture of how much you will be earning, the average membership cost starts from $59 to $200 per month. This also depends on the membership level. For non-members, the fee can be significantly higher (as high as $28 per class). The higher your number of clients, the better your earning capacity.
Orangetheory also allows its franchisees to earn through sales of branded clothing and other sports-related accessories.
In addition to the above factors affecting income, the location is also crucial to how much you make. Selecting populated areas for your new franchise units is a great way of improving your income. However, the distance between the new location and existing locations should be considered.
This allows for better enrolment of a new membership. Luckily enough, the franchisor helps in marketing your franchise. To grow your business effectively, you need to also be diligent in driving sales through innovative methods of marketing. To be highly effective in this regard, you need to consider every marketing tool available to you.
The Advantages of Owning an Orangetheory Franchise
From the moment it commenced business in 2010, Orangetheory has blossomed into one of the best fitness franchises. This has seen it recognized among Entrepreneur’s top 500 franchises as the #48th best fitness franchise.
It is a business opportunity that offers low overhead costs, high-profit margins, a small studio size with great infill opportunity, as well as its unique business concepts which continue to attract investors
As an Orangetheory franchisee, you also get to enjoy its amazing support. This is backed by its several years of providing the best franchise experience to its business partners. You also get to own part of a life-changing brand.
You promote health by providing your customers with a reliable option to shed off weight.
Applying for an Orangetheory Franchise
To become an Orangetheory franchise owner, you need to choose your preferred option. By the preferred option, we simply mean selecting the type of franchise you want. This involves visiting https://www.orangetheoryfitness.com/careers and choosing from either “own a US Studio,” “Own a Canadian Studio,” or “own an International Studio” options.
Each of these three options has different sites. You will be automatically redirected to your preferred option. For each of these, there is an available online application form you are to carefully fill and submit. This includes personal information and part of these will ask for your names, address, country, and zip code depending on which of these you want.
You are contacted after you successfully fill and submit the online forms. All other information regarding the next steps to follow will be given to you. For more details on the application process, kindly visit http://marketing.orangetheoryfitness.com/franchisees-2/ or call its helpline on 954-530-6903.
For every business established, there are state as well as local licenses that apply. You must find out every detail regarding the licensing requirements for your Orangetheory franchise. This enables you to avoid any legal setbacks that may result. The Small Business Administration SBA has a list of guidelines regarding licensing for businesses. You may want to find out the details of this.
Sales tax is yet another area you should be concerned with. Most types of businesses must collect sales tax the products or services provided. You need to have a full understanding of how this works, and if it applies to your Orangetheory studio.
The Orangetheory franchise has been our focus here as we have focused on providing prospective franchisees the needed information to start their franchises. While the franchisor offers a unique business opportunity that is highly successful, the onus is on you to fully exploit these opportunities. To be effective, you need to be willing to put in effort and dedication.
How much work and dedication you put in will largely determine how successful you are.